US Government Demands Immediate Answers On BP Oil Spill Containment

Tightening its clutches on oil giant BP plc. (BP,BP.L), the U.S. government has demanded an immediate report detailing plans to improve its containment and clean-up efforts on the Gulf of Mexico oil spill.

U.S. Coast Guard Admiral Thad Allen, who is coordinating the government response to the Gulf oil spill, sent a letter on Thursday to BP's Managing Director Bob Dudley asking the company to submit within 24 hours "detailed plans and time-lines" on containing the 80-day-old major oil leak.

The information is sought as the government is concerned over the risks involved in BP's plans to change caps on the oil well.

This is the second letter sent to British Petroleum recently reflecting the Obama administration's stringent scrutiny on the oil major over the oil spill.

In a June 23 letter to BP's General Counsel Rupert Bondy, the Department of Justice sought advance information about any major asset sales, merger deals, or significant cash transfers if the company plans to do so.

Despite growing anger over its inability to stop the leak, the oil giant has only managed to capture and flare about 22,750 barrels of oil a day through two containment systems placed over the wellhead last month.

The British behemoth had earlier said that it could raise the capture rate to at least 40,000 barrels by early July and could handle a flow of 60,000-80,000 barrels per day by mid-July.

But Hurricane Alex, the first of the Atlantic season, halted last week clean-up efforts and work on the first floating riser containment system, which will be connected to the Helix Producer vessel to capture more oil.

BP said the LMRP containment cap system, the Q4000 flare vessel system, and the planned additional containment systems had never before been deployed at these depths or under these conditions, and admitted that their efficiency and ability to contain or flare the oil and gas could not be assured.

Adm. Allen has sought details on Helix Producer as well as the schedule for the completion of two relief wells.

"We are entering a critical stage in the response where key decisions will be made.......with predictions for an active storm and hurricane season," he noted in the letter.

Dudley was quoted as saying on Thursday that the operation to drill a relief well will be completed ahead of schedule and that the company is hoping to cap the gushing well in the Gulf of Mexico between "July 20 and July 27 in a perfect world with no interruptions."

But Allen says "Our target date remains the middle of August because there are a number of uncertainties related to what happens when we get down and penetrate the well bore."

The U.S. National Hurricane Center reported on Wednesday that a tropical depression had formed in the Gulf of Mexico.

As many as 44,500 personnel, more than 6,500 vessels and about 110 aircraft are currently engaged in the response effort to contain the oil leak in the Deepwater Horizon oil rig that sank into the seabed while drilling for BP in Mississippi Canyon Block 252 on April 20.

The outflow of oil has increased voluminously. According to the latest estimates by U.S. government scientists, anywhere from 35,000 to 60,000 barrels of oil per day were flowing from the leaking riser pipe.

The oil slick has been growing largely unabated, seeping into the precious wetlands of Louisiana and other southern coastal states, threatening the Gulf ecosystem and the U.S. seafood industry.

Tar balls from the oil spill have reached Texas beaches Tuesday, spreading the ecological damage to all five southern U.S. states along the Gulf of Mexico coastline.

Meanwhile, in a significant development on Thursday, a federal appeals court denied the U.S. government's request to reinstate a six-month moratorium on deepwater drilling in the Gulf.